National leaders emphasise growth

The EU’s national leaders vowed today to take action further to get their economies growing again at a two-day summit. But there were differences over how far and fast to push ahead with structural reforms to revive growth.

At the summit in Brussels, leaders backed the need to combine deficit reduction with measures to boost economic growth, reaching agreement on “completing the single market”.

Herman Van Rompuy, the president of the European Council, defended the EU’s economic strategy against criticism that the emphasis on deficit reduction was depressing economic growth.

“We’re not doing this because we like slashing debt but because it makes it possible for us to have economic growth and more jobs,” he said. “The quicker we are able to restore confidence in the euro area, the quicker consumers and companies will be able to consume and invest.”

There was, however, disagreement over how quickly the EU should push through reform of labour and product markets.

Single-market reforms

Ahead of the summit, David Cameron, the UK’s prime minister, and leaders from 11 other countries, sent Van Rompuy and José Manuel Barroso, the European Commission president, a letter calling for swifter action to deepen the single market and liberalise the services market.

Cameron said that economic reform was the only way to drive growth because countries could no longer rely on running up debt to boost the economy.

“In Europe there is no room for fiscal stimulus. No governments have got the money to stimulate their economy through large tax cuts that are not funded or for spending increases,” he said. Instead, free trade, opening up markets and de-regulating the economy were the only ways to stimulate growth.

Cameron welcomed the fact that the prime ministers of Italy and Spain had joined the group of 12 leaders backing the letter. Referring to how pro-free market initiatives were usually supported only by northern European member states, Cameron said: “What is different is having the Italian prime minister, the Spanish prime minister and the Portuguese prime minister very sympathetic too.”

Cameron said that the summit conclusions had been “fundamentally rewritten in line with our demands”. He said that the original version had not mentioned deepening the single market “we now have a clear commitment to take action in that area”.

Germany and France did not throw their weight behind the letter from the 12 leaders.

Sarkozy said that he welcomed the letter on growth but that he and Merkel disagreed with “about 10% of it”.

He said that he particularly rejected the push for the liberalisation of services and for more de-regulation.

The conclusions of the summit, which were approved unanimously, says: “The European Union is taking all necessary measures to put Europe back on the path to growth and jobs. This requires a two-pronged approach, covering both measures to ensure financial stability and fiscal consolidation and action to foster growth, competitiveness and employment.”